Starbucks Chooses at&t for Wi-Fi

If you are a T-Mobile Hotspot user, don't panic. Your service will still work at Starbucks. But if you are anybody else, Starbucks and at&t are serving up something even more tasty.

Namely, two free hours a day of Wi-Fi access at Starbucks. Additional hours will cost $3.99 for additional two-hour chunks of time.

Under the earlier plan with T-Mobile, Starbucks customers needed a paid subscription to access the in-store Wi-Fi service.

Users also will have a choice of monthly subscriptions costing $19.99 that will enable access to other AT&T hot-spot locations in addition to Starbucks.

At&t broadband customers will be able to surf at the more than 7,000 Starbucks locations in the U.S. for free, as well. The new Wi-Fi partnership is expected to be introduced gradually at Starbucks locations this spring.

So seating is going to be harder to get, and access more congested. It's still a great deal.

T-Mobile USA: Strong Quarter

Of the four largest U.S. mobile carriers, all but Sprint seem to be posting strong gains. T-Mobile USA says it had added 857,000 net new customers during its most-recent quarter. Average revenue per user also was up to $53 in the quarter, rom $52 in the third quarter of 2006.

Operating income was up 15.1 percent compared to the same quarter of 2006, while churn was down to 2.0 percent from 2.3 percent in the third quarter of 2006.

Contract customer net additions in the third quarter of 2007 made up 65 percent of customer growth, down from 80 percent in the second quarter of 2007 and 96 percent in the third quarter of 2006. Prepaid additions are the reason.

Contract customers represented 84 percent of T-Mobile USA's installed base.

Blended churn, including both contract and prepaid customers, was 2.9 percent in the third quarter of 2007, up from 2.7 percent in the second quarter of 2007 and down from three percent in the third quarter of 2006.

Blended ARPU was $53 in the third quarter of 2007, the same as the second quarter of 2007 and up from $52 in the third quarter of 2006.

Contract ARPU was $57 in the third quarter of 2007, the same as in the second quarter of 2007 and up from $56 in the third quarter of 2006, driven by increasing data services revenues.

Data services revenues were $666 million in the third quarter of 2007, representing 15.4 percent of blended ARPU, or $8.10 per customer, compared to 14.7 percent of blended ARPU, or $7.80 per customer in the second quarter of 2007, and 11.3 percent of blended ARPU, or $5.90 per customer in third quarter of 2006.

Text messaging still is the most significant driver increasing data ARPU. The total number of short message service and multimedia messaging service messages increased to almost 21 billion in the third quarter of 2007, compared to 18 billion in the second quarter of 2007 and 10 billion in the third quarter of 2006.

700 MHz Auction: Not the Best, Not the Worst

For many observers anticipating the soon-to-begin auction of valuable 700-MHz wireless spectrum in the U.S. market, there is some combination of great hope and fear that it will all be business as usual and that nothing much will change.

The great hope scenario calls for some new entrant to win the C block and create a national, open, Internet style broadband wireless network. The great fear is that at&t or Verizon will be the big winner, stifling innovation once again.

For mobile industry service providers, you can reverse the hope and fear positions. Incumbents hope at&t or Verizon will win, precisely to prevent the emergence of an open national broadband mobile network. They fear an outsider could snatch the spectrum away and actually do that.

In the end, he outcome will not be so wildly good for innovation, but not stultifying either, even if an at&t or Verizon wins the spectrum. Change is coming simply because the mobile Web is coming, and no contestant can stop that. Innovation will continue to flourish on the Web side of the business, no matter what is done on the walled garden sides of the business.

Consider the mobile music business. We are far from knowing how the use cases and business models play out. But we already can point to some facts. Walled garden services featuring downloads or rental have been seen as the logical evolution, and that certainly is where early efforts have focused.

Over time, users might do other things. They might sideload their music, then share with their friends using Bluetooth, Wi-Fi, 3G or 4G. You might say this is a laborious process, and you would be right, if all we have is today's tools. That will change. Somebody will author an elegant program for syncing sideloaded music with other handsets. It might not be iTunes that drives this, since iTunes is quite sharing-unfriendly by design.

But somebody will do so. And then the business might shift as it grows. Online downloads and sideloading will increase. But then sharing will kick in. Then it might turn out that walled garden download services aren't as big a deal as we once thought, but open download services are. Maybe the sharing software is simple enough that users can see each others' playlists and trade songs, one for one.

Maybe there's even some monetization scheme possible where songs are traded or shared. Most people don't seem to mind paying a fair price to get a song they like. Maybe they won't mind paying some amount to share songs with friends or even bystanders.

The point is that walled gardens might be the logical way a service provider approaches building a new business. That doesn't mean other ways are precluded, especially when the mobile Web really gets to be popular.

In a sense, the very existence of the mobile Web ensures that innovation will happen. Some might argue a better way to approach things is structural separation, where transport and access are separated from the retail side of the business. Others will argue that it is more feasible simply to "functionally" or "operationally" separate wholesale transport and access from retail operations.

Even in the absence of those mechanisms, the mobile Web is going to allow innovators to do things "without asking permission" of the retail wireless operators. The Federal Communications Commission's rules on open network attachment for the C block will help ensure that regime, as the operator of the C block network will not be able to block the use of "open" or "third party" devices.

The likely outcome of the C block auction is that either at&t or Verizon wins it. Whichever contestant does not win the C block will pick up A and B block spectrum where it is needed to reinforce existing operations or extend the current service footprint.

Verizon and at&t simply have the business motivation to win the auction. Sprint won't be bidding and T-Mobile arguably can't afford to bid. Still, it won't halt innovation, though we won't see as much change as if an outsider with no vested interest in today's revenue models were to win the auction.

But the mobile networks are going open in some significant ways, even if the basic business model doesn't change as fast. But T-Mobile already offers a "data-only" service plan, with no need to buy voice to get the data. In principle, it should be possible for this to happen on a much-wider scale, and then users can draw their services entirely from the mobile Web, rather than using walled garden services.

The auctions probably won't be as good as some hope, but certainly not as bad as feared. And that might be case no matter which viewpoint one has. Those who want change will see measurable "goodness." Those who have reason to fear the coming changes will have time and resources to adjust and embrace the change.

When all is said and done, the auctions will neither be a disaster nor a revolution. Neither will they honestly be anything other than another important step towards more openness and choice, however. It's coming.

Open Mobile a Game Changer

There arguably are as many threats and opportunities as mobile carriers move towards more-open networks and terms of use. Not all customers will want all that much control over their experience, devices and services. Walled gardens work well where optimizing a complicated user experience is necessary. iPod offers a salient current example of that approach.

Others will want nothing so much as a mobile version of the Interent. But most users will be found in between those two poles. For many consumers, the ability to unbundle the device purchase decision from the service provider will be change enough, as has been the case in European markets where such unbundling is commonplace.

The open networks trend will more troubling for carriers to the extent that more users may want to use their mobiles just like they use their PCs to access apps and services delivered by the Web.

The business challenge there is the same one carriers have faced in the wireline broadband access market. They have a pipe business based on "access." Beyond that it has been tough to monetize the access.

It isn't clear yet how the user expectations about payment models change over time. For some, there will be a permanent change in thinking about devices. People will own the devices they want and then select access and transport services separately, much as they buy their own PCs and buy broadband access from any number of suppliers.

Just as clearly, some will prefer to have their handsets subsidized in exchange for service contracts.

It is clear enough that mobile applications will explode, much as they did when the broadband-accessible Web was popularized. Carriers will sell lots more data plans, and bigger data plans. Beyond that is where the business models will have to be developed. Right now, it's hard to determine whether this is primarily good or bad for carriers, as much as it is clearly good for end users. Obviously there is new thinking by carrier executives that the trend now is inevitable in any case, and offers the possibility of rapid applications development that will drive the attractiveness of mobile broadband access itself.

First Steps at Sprint

New CEO Dan Hesse says his first priority will be to tackle the customer-service problems and customer defections that have plagued the company in the past year.

An internal Sprint document recently disclosed described the company's "inferior results" in customer service. It pointed out that Sprint resolved just 53 percent of problems on the first call, compared with 71 percent for T-Mobile USA, despite Sprint having nearly three times as many customer service reps.

One would expect no less. Hesse is viewed as a highly-competent manager, and this is the sort of problem a good manager can fix. But later, recall that Hesse was the pioneer of AT&T's "Digital One Rate" plan, which introduced flat-rate pricing to U.S. wireless consumers in the late 1990s. That one move revolutionized mobile pricing in the U.S. market.

Once he gets the churn and customer service problems under control, we'd be watching for more innovation from Sprint than one typically sees.

T-Mobile, 3 Join 3G Networks

T-Mobile and 3 are pooling their U.K. 3G transmission networks, a move expected to reduce mobile tower sites by about 5,000 and save £2 billion in capital spending.

Kevin Russell, 3's UK chief executive, said the joint venture deal includes contingencies should either company be taken over, but both expect it to be a long relationship.

The move is not unprecedented, but still is unusual. Though not dictated by regulatory requirements, the move essentially creates a wholesale entity both retail networks will use to operate their businesses. It is not a structural separation, but certainly a functional separation.

By the end of 2009 the two companies plan to have 13,000 sites, covering 98 percent of the population with a mobile broadband network capable of speeds up to 7.2 Mbps.

Business Model Juxtaposition

There are multiple reports from Twitter users on T-Mobile networks that Twitter streams are being interrupted. Separately, photographer Lane Hartwell has taken 5,000 images formerly available on Flickr out of public view. What's the resemblence?

Hartwell objects to images being used on the Web without credit or compensation. "I don't want people just taking my stuff and saying, 'We're going to redistribute this to the masses," she says. She wants to protect her business model, in other words.

Assuming T-Mobile actually is blocking Twitter posts, one would assume there is a similar motivation: to protect the business model.

"It is stealing," Hartwell says of the unauthorized use of her photo in a YouTube video. "I'm not a charity. This is my living."

Likewise, T-Mobile seems to be taking the position that its "short code" service requires a commercial relationship with T-Mobile.

“Twitter is not an authorized third-party service provider, and some services are not available on third-party networks or while roaming," T-Mobile is reported to have replied to a complaint about the apparent Twitter blocking.

"We may impose credit, usage, or other limits to service, cancel or suspend service, or block certain types of calls, messages, or sessions (such as international, 900, or 976 calls) at our discretion,” T-Mobile reportedly has said.

The point is that use of some resources occasionally is a direct assault on some individual's, or some enterprises's, business model, and those entities sometimes take steps to protect their business models.

The observation is that as all content, communications and information moves to IP delivery, these sorts of disputes are bound to multiply.

Android: It's the Business Models

The most important thing about Android, the open mobile operating system and platform sponsored by Google, is arguably not the technology or the implications for handset cost: it's the development of business models.

One might think: "well, this is open source, so we will look for business models that are like the existing models for open source." But that's probably not going to be the case. Today's revenue model for open source is payment for enhancements, support and training.

To some extent, the business model is implicit rather than explicit. If I am a hardware or software applications provider, I simply use Asterisk because it is a lower-cost way of implementing something that an end user actually buys, even it the thing being bought essentially is a "legacy" requirement.

Voice mail, phone system or messaging platform are examples. In those cases, the operating system is an input to a business model, but not the model, which is the same one that existed before the open source tool was available.

Translated into a mobile market, it looks different. Open source will not do much, in and of itself, to lower the cost of a handset. So open source doesn't necessarily mean "cheap or free handset."

One can assume handset makers using Android will stabilize their versions so there is little need for third party end user support. That is a bug, not a feature, in the mobile end user world.

And since the whole idea is "easy to use," there shouldn't be much of a market created for training people how to use, develop, maintain and upgrade their operating systems. End users don't want to do that.

Assuming Android devices are used on existing networks (the 700-MHz C band network remains a bit of a wild card), the pricing models for data access are relatively affordable already, so it isn't clear whether there is immediate impact on data plan pricing either.

So consider Android a better way to help create a mobile Web business. The mobile phone business is built on recurring payment of access fees for voice, text and data access. The mobile Web just assumes access.

So the revenue model must begin where the Web itself begins. And that means advertising, to the extent that features and content have to be monetized directly. Of course, there's also content and applications given away for free in hopes that the attention will lead to support for some other business model, be that public relations, consulting, marketing, software or what have you. In that case a content provider doesn't necessarily require a revenue model.

But that's not what service providers, device manufacturers and application providers are looking at. The issue is revenue. And from where I sit, that means a media model.

The media model includes "for fee" and "for free" services and content, with greater or lesser degrees of advertising support. That means "aggregating eyeballs" and "aggregating highly-detailed information about the owners of those eyeballs" and "tracking the behavior of those people." That makes the advertising model quite valuable.

In the mobile arena, valuable as in "can I entice you to visit Starbucks right now; it is around the corner?" Valuable as in "are you hungry and a lover of good Thai food? You are half a block away."

Some will speculate about whether an entirely ad-supported model is conceivable. Well, it's conceivable, but not likely. Broadband access isn't free. But that isn't the point. If the value is high enough, a reasonable fee is not a barrier to usage.

Android is more likely to have an impact in making the mobile Web, and applications built on the mobile Web, far easier to use and vastly richer in functionality.

That's a hugely important and economically significant activity. But I don't think Android is about "free phone calls" or "free Web access" or "free phones," as many either think or hope for. Rich applications will be reward enough for users, who are quite capable of figuring out a value-for-money proposition. Android is about the promise of a mobile Web so useful we won't mind paying access fees to use it.

The one exception is that some users will appreciate "sometimes" being able to use Wi-Fi hot spots to access applications. This is a subset of users who choose not to pay a recurring fee for fully-mobile access, and want to rely on Wi-Fi for all of their connectivity.

Then there are users who occasionally will be happy to have Wi-Fi access for signal strength reasons, even if they are comfortable with a fully-mobile broadband connection.

Still, it seems likely that the early pull of Android applications is going to be location-based. "Where am I? How do I get there? Where can I find it? I didn't know that was on sale. So that's where you are."

Ad-supported phone calls, devices or access might have some role to play, sometimes. But I doubt that's the big impact.

Google Threat to Telcos: How Real?

Yesterday at the Stealth Communications Voice Peering Forum, there was spirited discussion about Google, and on Google's impact on the broader telecom industry. One line of thinking was that Google wasn't as big an issue as sometimes thought, because the one thing it really has succeeded at is advertising. The implication is that Google will not, or cannot, emerge as a force in the mobile or landline parts of the telecom industry.

The other point of view is that Google already has become a factor, even if it is only as a force reshaping all of advertising.

Likewise, some people are going to argue that Verizon Wireless and at&t Wireless announcements about the openness of their networks are essentially "no big deal." Customers already could swap Subscribe Information Modules" in at&t and T-Mobile phones because both carriers use GSM, and that's just a feature of a GSM network.

That misses the point. The entire U.S. wireless industry now has formally and publicly embraced the notion of open networks. There won't now be any retreat from that position, as end users increasingly will expect it, as every consumer expects such openness in Europe.

And though it sometimes seems as though all essential regulatory debates have ended in the U.S. market, the converse is true. In large part because of what now is happening in Europe, policymakers ultimately are going to have to reexamine the basic national framework for telecom regulation in the U.S. market.

The argument that a capital strike is inevitable in any "functional separation" regime, or a "structural separation" regime, does not seem to be borne out in the European markets. Carriers might not like the framework, as it is helpful to competitors. But dire consequences: a capital strike that cripples robust broadband access deployment, does not seem to be occurring in Europe, where such a strike might have happened.

That is not an endorsement of "anti-telco" restrictions. What is required is some encouraging, stable policy that provides clear incentives for rapid, aggressive optical access investment on the part of the leading U.S. telcos, and assures their investors that a predictable return is possible. "Structural" or "functional" separation essentially can "guarantee" a carrier that most wired broadband traffic (other than cable's) will flow over the carrier's owned pipes.

In essence, regulators can ensure that nearly 100 percent of broadband access traffic. other that that provided by cable operators, flows over the incumbent wired telecom network. Granted, the U.S. and European markets are diverging. Cable is a big factor in the U.S. market and is driving measurable and effective competition to a large extent.

The issue is whether some sort of separation can be crafted that actually creates a better investment climate for incumbent optical access facilities. That isn't the way separation traditionally has been viewed. But circumstances might be changing. A company whose "reason for living" is the "best possible optical access", serving virtually every potential retail competitor, with reasonable assurances of a return on investment, might be worth looking at.

The analysis will not be easy. Cable is a huge "fact on the ground". It might be too late to create a regime where all retail services flow over one huge physical access network. Also, cable operators historically have resisted giving up their networks. But there's a cost to upgrading those networks, and the financial markets never like it when cablers have to invest heavily in those networks.

But even large global carriers are discovering that spending more of their dear capital on transport facilities might not be the best way to proceed. It might seem improbable at the moment that such a fundamental new debate is possible. But give matters a couple of years. Demand for access bandwidth is going to explode. Carriers, with the exception of Verizon, will need to respond.

Financial markets will need reassurance. Maybe the current regime continues to work. But maybe it doesn't. Watch the European markets. If bandwidth demand continues to explode, and European end users start to routinely receive much more bandwidth than U.S. consumers do, there will be an inevitable demand for doing something in the U.S. market.

att wireless goes open

The last wall has crumbled: at&t Wireless says it will "immediately" open its network to any device and use of any application, without contract requirements, with the exception of Apple's iPhone, which still will carry a two-year contract requirement and remains subject to Apple's own requirements.

Consider what has happened in just a month: Sprint Nextel and T-Mobile agree to work with Google on Android, the open operating platform for mobile devices. Then Verizon says it will open its network next year. Today, at&t Wireless says it is open "now" to any GSM devices.

In the process, the entire U.S. wireless industry has moved to an open, unlocked devices regime that, although the norm in Europe, never has been the U.S. regime.

Give credit to Google. It has done what no other company could do: it has forced openness upon the entire U.S. wireless industry, proving that, at least sometimes, only a very large, very powerful contestant can cause massive industry innovation.

What Google Wants

Confused about what Google really wants in the mobility space, and in particular what it wants from the 700 MHz spectrum auctions? The simple answer is that Google is for mobile what the Internet was to telecom service providers: an alternate communications medium whose value does not hinge on access, but on applications.

Wireless service providers will fight Google without quarter for the same reason they learned to loathe the Internet: it is difficult for them to extract revenue when value lies in applications not dependent on recurring payments for access.

That doesn't mean Verizon and at&t, in particular, won't try to make a business out of it. After all, despite the margins, despite the gross revenue implications, both are fierce competitors in the broadband access business. But the tack will be to stop it if possible, slow it where possible, but adapt if necessary.

But Google is not the only force pushing against the old order. iPhone, for example, seems to be the first of any number of approaches to thinking about what a mobile handset is, what an operating system is, what a platform is and where value can be extracted in the ecosystem.

As Skype and UK cellphone operator 3 reportedly are working on a new mobile handset that promises to "make Internet calls mobile," rumors continue to swirl about a possible Gphone or Google phone. Nokia is rolling out N95 series devices that also raise the question of where the leverage lies: operating system, user interface, handset, application or extended application ecosystem.

It’s an important question. Remember back when people seriously thought the browser would somehow translate into “ownership” of the user? That largely proved incorrect.

But operating system ownership has proven a more durable lock on value and customer ownership. Facebook might be showing the power of the platform. But the iPhone seems to suggest the power of the device itself. In short, getting the answer right might confer genuinely significant leverage in the mobile business.

Much of the impetus for thinking about such things comes on the heels of rumors about a Google phone, Google mobile operating system or mobile platform. While the thrusts are not mutually exclusive, the strategic approach Google takes conceivably could redefine much of the existing mobile business.

The difficulty of pinning down the likely thrust is difficult, as Google has to be working on a number of aspects, all at the same time. It must create a mobile interface to the Internet while supporting voice services not significantly inferior to those handsets offer today.

That means Google has to convert the Internet experience for the phone and create or enable a suite of related applications and applets that all work smoothly together and share data.

Then it has to create awareness of some mobile features users didn’t know they wanted, such as location-aware services and features.

All of that means an Internet-connected device supporting voice, instant messaging, Web browsing, search, document storage, retrieval and creation, email, storing and playing entertainment. The applications must blend “knowing you are available” to “knowing where you are.”

Google has to do all that and also make the PC and mobile experiences similar and intuitive. And after all that is done, has to create a business process for supporting all of that with an advertising revenue model.

Of course, Nokia, Apple, Microsoft and Samsung—among others—will try to do the same thing, at some point. Unless it can be done, Microsoft will have a tough time making 25 per cent of its revenues, or about $14 billion, from advertising in the relatively near future, as it says it will.

The issue, perhaps, is how many of these sorts of things have to be handled by the handset. How “skinny” can the device be and still provide a reasonable user experience?

And how much does an actual handset matter, if a widely-distributed reference model can be propagated? Still, as Apple has proved time and again, a tightly-coupled hardware and software approach can yield outsized results in the user experience area.

Many argue that Google will want to avoid getting entangled in the consumer electronics business. True enough. Others make the same argument about any possible plans to bid for its own spectrum.

But Google executives have said mobile offers Google the biggest possible opportunities. If that is true, stretching into unfamiliar areas might be the best way to dominate the new business.

It’s just an opinion, but an “operating system” approach offers the least risk but the least reward. Devices and the ecosystem are much more risky, but offer greater reward. And since Google is sure to encounter resistance from the established wireless carriers, owning its own network might be the only way to get rapid adoption.

So that’s what Google is up to: creating a mobile broadband version of the open Internet.

Android Creates Instant Developer Community

One of the big problems a communications service provider faces is how to leverage the creativity of the Web and apps community to drive service innovation which carriers frankly are ill equipped to undertake. Android basically solves that problem. Developers respond to big opportunities and that is what Android now represents: a chance to develop apps for mobile operators representing 40-some-odd percent of the U.S. mobile population, virtually all of China, one of the fastest-growing global markets, plus the two dominant providers in the trendy Japanese market plus Spain, Germany and Italy, just for starters.

That's an instant and massive developer community at a time when every major communications service provider needs such a developer community allied to it. Google may well disrupt. It also is going to help carriers move ahead on the innovation front in a way impossible on their own.

To the extent that most innovations and applications are going to come from the independent developer community--not from the carriers--this is a very big deal indeed.

That isn't to underplay the role played by developers working for Microsoft or Symbian, either. It's just that leveraging the Linux community adds even more intellectual capital, and capital that heretofore hadn't been deployed to enrich mobile Web apps.

Sprint OKs Phone Unlocking

Sprint Nextel has agreed to provide departing Sprint PCS customers with the code necessary to unlock their phones. Of course, an unlocked Nextel iDEN phone won't do you much good. But at least Sprint's CDMA phones can be used on the Verizon or Alltel networks.

Sprint made the offer to settle a California class action lawsuit and an Alameda County Superior Court judge has given the settlement his preliminary approval. A final approval hearing hasn't yet been scheduled.

Sprint said it will share the unlocking code with all current and former subscribers once their phones are deactivated and their bills are paid. The company also will add information about the locking software and how to obtain the unlocking codes in the list of terms and conditions of service given to new customers, and instruct its customer service representatives on how to connect a non-Sprint phone to the Sprint network.

The settlement covers customers who bought a Sprint phone between Aug. 28, 1999, and July 16, 2007.

T-Mobile is facing a similar class action lawsuit in California. Users of the iPhone, which is locked to the AT&T network, filed two separate lawsuits last week against the carrier and Apple Inc., claiming its use restrictions and a software upgrade that disables unlocked iPhones constituted unfair business practices.

iPhone Dings Treo and Sidekick

iPhone buyers were 10 times more likely than other new phone buyers to have previously owned a Treo and three times more likely to have owned a T-Mobile branded phone, such as the popular Sidekick model, say researchers at NPD Group.

In contrast, iPhone buyers were no more likely than the average buyer to have previously owned a Blackberry. NPD theorizes that lack of support for corporate BlackBerry servers is the reason.

Alltel and T-Mobile took the biggest churn hit. Consumers who switched carriers to buy an iPhone were three times more likely to switch from Alltel or T-Mobile than from other carriers.

Sprint and Verizon also lost customers to at&t, but not nearly to the same degree.

If early buyer trends hold up, the iPhone might be bridging the gap between content-focused feature phones and productivity-focused smart phones, NPD argues.

Personally, I still think it will be tough to develop a single device that is equally adept at melding feature and productivity device functions. Well-designed user interfaces will help, but the fact remains that such devices must embrace too much complexity and consume too much power. That means the devices will be harder to use.

Mobile phones still are consumer devices. And in the consumer device space it is a truism that a single-purpose device will outperform a multi-purpose device. Unfortunately, lots of us will continue to use two devices as a result.

Mobile IS Broadband by 2011

Mobile broadband will be the dominant broadband platform worldwide in 2011, according to Informa Telecoms & Media. There will be more than one billion broadband subscribers worldwide in 2011, with the majority using mobile rather than fixed networks.

Mobile broadband will be a "more than" $400 billion service revenues business in 2012, as a result. Of course, getting there will mean climbing a wall of end user resistance to mobile broadband pricing, research by Parks and Associates suggests. That might be especially true if mobile broadband winds up being a replacement for narrowband mobile access, rather than fixed mobile access.

HSDPA (High-Speed Downlink Packet Access) will be the leading mobile broadband technology by then in terms of number of subscribers, followed by EV-DO (Evolution Data Optimized and mobile WiMAX.

"Mobile broadband will represent close to half of total mobile service revenues in 2012," says Mike Roberts, Informa analyst.

Telcos and Web Communications: Who Wins?

Attention might not be the basis for every revenue model, but it clearly underpins most media businesses. It might underpin other businesses as well, including communications.

So note changes in how and where people in France are spending their "communications" time. Since 2000, attention and time spent have been shifting towards Web-based applications and pursuits, and away from telephone-based communications. To be more precise, 53 percent of "communications" or more might be said to originate in some Web related activity, not a classic "pick up the phone" activity.

Time isn't exactly money, so attention and usage do not translate immediately into revenue. But attention sooner or later will create the possibility of revenue. And if this sort of shift in how people communicate continues, revenue opportunities and potential inevitably will shift.

That doesn't mean revenue-generating endpoints such as mobile phones, other communicating devices or "access" services will stop proliferating. It simply is to point out that when so much communications activity originates in Web-based things, whether enterprise or consumer driven, something new will happen, revenue-wise. It has to.

T-Mobile Sells iPhone in German Market

T-Mobile will sell Apple's iPhone in Germany for 399 euros ($558) each. Service plans weren't immediately announced. As in the United States, where Apple picked at&t as its exclusive network services provider, customers in Germany will have to sign up for two years to buy and use the 8-gigabyte version of the phone-iPod-Web appliance.

In the U.K. market, where O2 has a five-year exclusive on service for the iPhone. And a pattern seems to be developing in terms of the business model.

Estimates of how much revenue O2 is going to share with Apple vary between 10 percent to 40 per cent and it is likely both figures are correct. The delta is what Apple gets paid based on the degree of churn the device can induce.

Apple might get 10 percent of revenue when an existing O2 customer gets an iPhone, but Apple might get the heftier percentage when a customer switches service providers and becomes an O2 customer.

at&t pays Apple $3 a month when one of its existing customers buys an iPhone plan, but $11 a month when a customer switches carries and becomes an at&t customer.

O2's ARPU (Average Revenue Per User) is around £23, so 10 per cent of that would be £2.30 while 40 per cent comes to £9.20.

iPhone for O2: Zero Margin for Carrier

Mobile operator O2 (Telefonica) reportedly has won the right to sell the Apple iPhone in the U.K. market. It may ultimately regret the victory, as the Guardian reports O2 is giving Apple 40 percent of service revenues.

The other U.K. mobile operators reportedly backed away from the deal as the O2 business arrangement essentially is a guaranteed money loser. O2 of course is gambling it can leverage the deal to take share from its U.K. competitors.

As part of the deal, Carphone Warehouse will act as an authorized retailer for O2 as well. Apple apparently retains control of device pricing.

The deal is part of a number of potential destabilizing developments in the mobile business. It isn't simply who is in the networks business. It also is where value and hence profit are to be made in the mobile ecosystem. Apple thinks it is the phone. Google might think it is the ability to create targeted advertising. Other players, such as satellite TV providers, might see value in the ability to create a triple play including broadband access and voice.

In the U.S. market there is the possibility of bids for 700 MHz spectrum, enough to construct a national broadband network. Google has said it likely will bid, and Apple itself is said to be considering its own bid. Other contestants in need of a terrestrial broadband capability, such as DirecTV and EchoStar, have to be weighing their own options as well.

Buying a transmission network is a costly way to create an application delivery network. But there are precedents. Broadcast TV, radio, cable TV, cellular, paging, satellite TV and telephone networks all were built to provide a single "killer" application. Apple could be looking at 700 MHz as a way of jumpstarting mobile video. Google is more interested in mobile advertising. The satellite providers would gain a terrestrial broadband and voice capability to create a triple play under their own control.

One might question whether any new firm focused on new applications would want the headaches of running a network. One might question whether the advantage of owning a network is really worth what it would cost to acquire spectrum and construct a network. But it is a measure of destabilization that such developments are being pondered.

Separately, T-Mobile is expected to win exclusive iPhone rights in Germany, while Orange wins that right in France. At this point, Apple is betting the device trumps the network. The U.K. iPhone will use the slower 2.5G EDGE network, not the faster 3G network.

DT Gets iPhone?

T-Mobile appears to be the exclusive carrier for the iPhone in Germany next week. Apple reportedly has a revenue sharing deal similar to that with at&t, in which Apple collects a portion of the monthly subscription fees. Pricing will reportedly be set at 399 Euros ($554) for an 8GB model. It isn't clear whether 3G support is forthcoming.

Massive Email Outage in the Works?

NTP, a patent holding company based in Arlington, Va., is suing Verizon, AT&T, Sprint Nextel and T-Mobile USA for infringing several of its patents, all of which are related to the delivery of e-mail to mobile devices. You might remember that NTP wrung $612.5 million out of Research in Motion for doing so.

In its new round of suits, NTP claims mobile carriers mobile email services also violate those patents.

NTP wants an injunction to stop the infringing actions. Injunction. As in "you will stop delivering email now and then we will go to court to figure out whether you really are infringing or not. Injunction. As in massive North American email outage.

Five of the eight patents NTP claims are being infringed were the subject of NTP's 2001 patent suit against Research in Motion, the maker of the BlackBerry. In November 2002, a jury found that RIM infringed upon NTP's patents.

In 2006 RIM agreed to pay NTP to settle the case.